AstraZeneca (down 5%) and Shire (down 6%) shares lost a total of $8 billion in market cap Tuesday. Abbvie, the company on the other end of the Shire deal, was down 4.6% in premarket trading. These biopharmaceutical firms (and a few others) are in the middle of merger deals that aim to take advantage of the corporate tax savings that result from relocating the merged company outside of the U.S. In a surprise move, the U.S. Treasury department tightened the rules overnight:

The new rules, effective immediately, will make new inversions more difficult to do and less potentially rewarding – but whether that will be enough to scupper deals that are pending or under consideration is not clear.

The action follows months of political debate, with Democrats urging prompt legislative action and Republicans pushing to address the problem later, perhaps in 2015, as part of a broader overhaul of the loophole-riddled federal tax code.

“Inversion deals now are clearly going to be very difficult to pull off,” Navid Malik, head of life sciences research at Cenkos Securities, said.

As I’ve posted before, closing the loophole does not solve the fundamental problem that the U.S. corporate tax code is providing a strong incentive to locate overseas.